Pittsburgh’s VC numbers rebound in Q3, but still fall short of last year

Editor’s note: This quarter’s figures may vary slightly, as some deals aren’t accounted for until weeks after quarterly VC reports are published.

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National venture capital levels continue to break records. But while Pittsburgh’s numbers for the quarter are the highest this year, they still lag behind previous years.

In quarterly data released by Pitchbook and the National Venture Capital Association this week, VC deal frequency and dollar numbers saw yet another jump. Overall, deal activity saw $82.8 billion of investment spread across 3,518 deals in the third quarter, which bring the 2021 total so far to $238.7 billion across 12,837 deals in a new record over last year’s numbers. Those numbers once again show that while job reports are lagging, interest in investments is bigger than ever, demonstrating a continued faith in the full rebound of the economy after the pandemic.

“There is no denying that the startup ecosystem is powering America’s economic comeback,” said NVCA President and CEO Bobby Franklin in a press release on the new data. “Lawmakers in Washington who are looking for ways to enhance our economic future should check out these record shattering numbers. The VC industry is this country’s biggest job engine, and we have the numbers to back it up.”

And after a shaky first half of the year, Pittsburgh seems to have shared in some of that success. Since July, the city saw a total $121.37 million of investment into 24 deals, nearly tripling the $44.51 million across 21 deals it attracted in the second quarter (updated from NVCA’s original figures reporting $40.36 million across 11 deals).

But Pittsburgh still remains below the activity it saw last year. The first three quarters of 2021 brought in $228.08 million, below the $264.04 million yield over the same time period in 2020. And unless the city has an even more stellar fourth quarter than it did last year, Pittsburgh will most likely fall short of last year’s total $550.7 million in investment. This quarter’s numbers are also only a small percentage of Pennsylvania’s Q3 investments, which totaled over $1.5 billion, driven largely by big deals in the Philadelphia region.

Still, there are signs of hope in these most recent findings. The top two deals in Pittsburgh — UPMC cancer drug discovery company Novasenta for $20 million and market intelligence firm CivicScience for $15 million — were also the ninth and 10th largest deals in Pennsylvania, respectively. Duolingo’s IPO was also one of the most significant moves for Pittsburgh, coming in as the top exit for the state and the third largest exit for the Mid-Atlantic region.

The driving forces behind Pittsburgh’s VC increase this quarter were largely deals with companies in the life sciences sector — a growing trend for the city that Technical.ly has focused on in previous reporting and as part of our Tech + Health Month this October.

Apart from Novasenta’s $20 million deal, Pittsburgh saw an $11 million deal for biotech firm Carmell Therapeutics, $9 million for healthcare company Spark360, $8 million for medical device company Apollo Neuro, $6 million for pharmaceutical startup CytoAgents, $6 million for diagnostics company Cernostics and $5 million for molecular imaging manufacturer SmartBreast. This influx of capital to life sciences across the top 10 deals for Pittsburgh could indicate a new recognition of the commercial potential in the city’s medical expertise across its academia and hospital systems. But the huge expenses of clinical trials and the FDA approval process will require far more capital than these deals offer if Pittsburgh is to succeed in its mission to become a life sciences hub.

Outside of the life sciences, other top deals included $12 million for softball app company Diamond Kinetics and $10 million for food service AI startup Agot.AI.

Sophie Burkholder is a 2021-2022 corps member for Report for America, an initiative of The Groundtruth Project that pairs young journalists with local newsrooms. This position is supported by the Heinz Endowments.